Public Authorities (Fraud, Error and Recovery) Bill (Second sitting)

Neil Coyle Excerpts

Committee stage
Tuesday 25th February 2025 Public Bill Committees

[Siân Berry]

Okay. Even with that title?

Joshua Reddaway: Even with that title.

[Neil Coyle (Bermondsey and Old Southwark) (Lab)]

Q Joshua, you spoke about the Bill’s dual powers, both prevention and recovery. I just wonder, is it possible to quantify or estimate a percentage or lump sum figure of how much is expected to be saved from people who know they can no longer attempt to fiddle by not declaring capital or multiple accounts? Are you able to put a figure on that, or would you look for implementation before working on figures?

Joshua Reddaway: On how much fraud is created?

[Neil Coyle]

Q On how much this legislation will prevent people from trying to fiddle the system. There will be people who are aware of the new powers who then do not do it; that is the point you were talking about when it comes to prevention.

Joshua Reddaway: Is this the behavioural effect?

[Neil Coyle]

Q The deterrent effect, yes.

Joshua Reddaway: I have not done anything that adds to the information that is already in the impact assessment. I have not audited it, so I would just point to the numbers in there. I know there is an issue around whether people will split their money between multiple bank accounts. Is that also part of what you are referring to?

[Neil Coyle]

Yes.

Joshua Reddaway: I have spoken to DWP and the OBR about that. My understanding is that frankly it is an area of uncertainty, and that they wanted to make an adjustment because they knew there would be an effect but they do not know what that will be. We will have to come back and see what that is.

For me, the more fundamental point is that this power will not stop all fraud. It is designed to stop some. Will there be behavioural effects that will limit that? Yes. Does that in itself mean you should not try? No.

[Neil Coyle]

Q As the new powers are rolled out, where people attempt fraud and a recovery effort is made, that will be clear and quantifiable. Will you be able to put a figure on that? Will you be assessing in any way how much of a deterrent it has been to have the new powers, including the access to bank accounts, for example?

Joshua Reddaway: My first instinct is that I would ask DWP how it was going to do that, because that is how the wonderful world of audit works.

[Neil Coyle]

Of course.

Joshua Reddaway: Secondly, I would suggest to them that they can establish a baseline, because this is pretty transparent within their published statistics. You have got a breakdown there of how much fraud is caused by people mis-stating their capital. The reason DWP is able to do that is because when you apply for a benefit, you do not have to provide your bank statements, but when you are subject to an inquiry that informs the statistics, you do have to provide your bank statements. The statistic is generated by the difference between those two processes. That will continue to be the case after this power is enacted.

[Andrew Western]

Q Following on from one of my colleagues’ earlier questions, can I come back to the Bill’s ability to clamp down on and look at error? Would it be your view that in addition to identifying instances of capital fraud or of people living abroad or being abroad for longer than they should be, there is also the potential for the eligibility verification measure to capture overpayments? It would therefore ultimately have the benefit of reducing the level of debt that somebody might find themselves in were that to go undetected for a longer period of time.

Joshua Reddaway: I think that is a fair comment, given that I said it does not really deal with error. I was really referring to the enforcement powers under PSFA. I think PSFA do other stuff that is in the error space, but the enforcement stuff is not. The enforcement stuff for DWP also will not really be in the error space. However, you are quite right that any data matching is an opportunity to detect error, and DWP are used to that. For example, when they are doing targeted case reviews, that will be detecting error as well as fraud. What we know from the statistics is that DWP believes there is more fraud than error in that space, but I entirely accept the premise of your question, and I should have made that part clear.

--- Later in debate ---

[Mike Wood]

Q This is looking a lot like the King Henry VIII powers that the Government railed against in opposition for many years.

Andrew Western: I would not accept that and I do not think that that is the case. I would say that we require that flexibility. Even with the six weeks, if there are problems in the process, we would potentially need to act more swiftly than that, based on feedback from stakeholders. As I said, colleagues are very welcome to table amendments if they want to secure any changes in that regard.

[Neil Coyle]

Q Can I ask you a procedural question, Chair? Is it possible to furnish Committee members, through the Clerks, with instances in the last Parliament where codes of practice were missing from legislation? I certainly sat on Bill Committees where we did not even have the costings for Government plans. There seems to be a suggestion that this is not routine or is somehow abnormal. I wonder whether we could have that.

[The Chair]

That is a matter for debate. I think it is probably a question for the Library. Let us carry on with the questioning.

--- Later in debate ---

[Siân Berry]

Q Sorry, Chair, the second question I asked about the percentage of error was not answered. What percentage of error do you think would be acceptable, in terms of innocent people being targeted for investigation?

Andrew Western: I am not prepared to put a percentage on it. We would have to see what came out. We have done two previous trials on this and we are fairly confident in the mechanisms that are in place. That has underpinned some of the assumptions we have made. We are committing through this process to a test and learn phase so that we can keep errors as minimal as possible. Ideally, I would not want to see any errors at all, but ultimately we have structured this so that, were something to come back as a false positive, as it were, it would not lead to an immediate decision, because it would be passed to a human investigator for further investigation.

[Neil Coyle]

Q The first question is about legacy. The last Government were truly record-breaking. We now have a social security system with the highest ever fraud rates and with little action to tackle it. We heard from witness after witness today that the police have lacked the capacity and resource to tackle the problems. To what extent do you think the legislation is necessary to address the challenge that has gone untackled for over a decade?

Andrew Western: I think it is fundamental, given both the lack of previous action that you identify and a general modernisation of powers. The world is changing. The nature of fraud is changing, and the behaviours exhibited by fraudsters are different from those of 10 or 15 years ago. The previous Government tried to bring forward the third-party data measure, now likened to the eligibility verification measure, but it did not have the oversight and safeguards in place that we have now.

There are a number of totally new proposals in the Bill that are crucial. To your point about the capacity of the police, the powers of search and seizure will be particularly helpful in speeding up investigations into serious and organised crime, because we can crack on with that, as it were, and enter premises without the need to wait for co-ordinated action from the police.

The other totally new power that is really important here, and which I personally think is a fairness argument, is the ability to directly deduct from people who receive their income through means other than benefits or PAYE employment. Overall, it is a fundamental change to the way that we do it, and it is part of a broader package. As I said earlier, this saves £1.5 billion over the forecast period, but it is part of a broader suite of measures that amount to the largest ever intervention to tackle fraud of £8.6 billion over that period. Unfortunately, like many of these things, that number is so high because the level of fraud we have is so high.

Georgia Gould: I add that the PSFA measures are entirely new. There have previously been no powers to investigate and recover fraud from the wider public sector, outside of tax and welfare. This is some of the highest-value fraud, through procurement or businesses falsely applying for Government grants, which is currently going un-investigated because of the resource pressures that you talked about. These are landmark new powers to investigate fraud across the wider public sector that have not previously been considered.

[Neil Coyle]

Q We also heard, from the previous panel in particular, that disabled people lack confidence or trust in the Department for Work and Pensions—and I think that goes across Government—as a result of their treatment in the last 14 years. The DWP is facing a potential legal challenge from the Equality and Human Rights Commission because of the last Government’s treatment of disabled people specifically. Is there additional work, beyond the measures in the Bill, from either of your Departments, to try to tackle some of those trust and confidence issues, and to try to rebuild confidence in how the Department and the Government treat disabled people?

Andrew Western: Yes. We are always looking at ways that we can build stronger relationships and build trust. On specific interventions, I would argue that—although it runs contrary to the evidence that we heard from the witnesses—there is the potential, through the eligibility verification measure, to build trust not just with disabled people but with all people in receipt of benefits, because we will be able to check that they are entitled to what they have. The capture of overpayments at an earlier stage and the ability to know that people who are genuine claimants are receiving the right amount of benefit will help to build that trust.

What really erodes trust is someone being captured in a position where they think that they have, for several years, been receiving benefits to which they are entitled but then end up with, for instance, a £35,000 debt to the Department. There is a suite of activity ongoing with stakeholders. The Minister for Social Security and Disability is doing a tremendous amount of work to reach out to repair relationships where that needs to happen. That work must continue because people make a fair point when they tell us that they are fearful of the DWP. I speak to people who do not want to apply for current benefits; they want to stay on legacy benefits because they fear they will lose entitlement through the application process. That is something that we need to constantly keep under review. We need to look at what we can do to improve those relationships.

[Charlie Dewhirst]

Q A number of times you mentioned the importance of human engagement throughout the investigative process. Are you convinced that this programme will be sufficiently resourced? The previous Government, for the DWP angle, said that they needed an extra 1,400 counter-fraud officers and 2,000 additional officers to look at universal credit. Are you confident that you will be able to deliver these investigations in a timely fashion and achieve the savings that you want?

Andrew Western: That is an important question, on which I have sought to reassure myself. We have already been through a spending review process in which we secured additional funding for further targeted case review officers and officers in the fraud space. I actually think that the number of fraud staff in the Department is slightly concerning not because of a lack but because the number of people suggests the scale of the problem. Because of the spiralling nature of fraud, we have had no option but to significantly scale up the number of people working on both prevention and detection of it. I hope that by embracing new technology, and through data sharing and other mechanisms, we can gradually reduce that number over time. It is a damning indictment of the state that we are in with fraud and error that we have that number of people.

To answer the question, I am assured and we have secured funding for the people that we need.